Tuesday, October 28, 2008

Short Squeeze - NASDAQ E-Mini futures

Initially, I was getting ready to short a trendline break, then all of sudden, price spiked towards the most recent swing high. Head fake before we roll over? Surprise, surprise a bonafide rally. The rally soon turned into a short squeeze. And what a short squeeze! I was planning to exit at R2, but with lots of time left on the clock, I tightened the stop and gave it a shot. Hope everyone participated in this!!!


anarco said...

Awesome! I was also hoping that our small community of traders, bloggers, and readers benefited from such a huge move. I was also going to play the long side with the Q's (like your e-mini chart), but I decided to go short with SKF.

Jamie said...

Hey Anarco,

Nice work on SKF! Yeah, I hope folks were able to benefit from some of this move today. The bulls haven't enjoyed this type of action in quite some time.

Anonymous said...

Hey Jamie,

Spot on with the pennant head fake call. I caught SPY from morning high BO into the close. Sweet.

I am trying to understand the apparent additional leverage/ volatility in the Ultrashort ETFs (which I seldom trade). They seem to provide greater percentage moves (especially today). Any comments would be appreciated.

Jamie said...

Hey Jim,

Nice work!

Yeah, they do provide at least twice as much profit (loss). I've been trading them in my retirement account. Some of our Canadian beta ETFs are not very liquid. I don't like to use stops in my retirement account but with these I've changed my strategy. On Friday I shorted the market and initially it went in my favor. I was up $1.00, took a partial and then it went against me and all I could do was salvage $4.00 profit after commissions on 1,000 shares. Wide spreads and lack of liquidity can kill a trade in minutes.

Now I'm looking for very tight consolidations and well shaped patterns such as C&H and I'm using buy/sell stops just like daytrading.

I really like the beta ETFs as I've had a few big winners but they have to be kept on a tight leash.